Study: 54% of middle-income seniors will not be able to afford assisted living

More than half of middle-income seniors in the U.S. will not be able to meet the costs of assisted living, even if they committed 100% of their annual financial resources, new research shows.

According to a study published online today in Health Affairs, it will cost about $60,000 annually for assisted living rent and associated payments for care of seniors in the next decade.

The report projects about 14.4 million people of middle income and over the age of 75 will need assistance over the next decade as demographics shift.

“Middle market seniors are most at risk for not being able to afford seniors housing because they have too much in resources to qualify for government support programs, but not enough to access market rate options for very long,” a spokesperson from the National Investment Center for Seniors Housing & Care (NIC) told FierceHealthcare.

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The study, conducted by researchers at NORC at the University of Chicago and funded by NIC, underscores the need for the government and private sectors to intervene to ensure middle-income seniors will be able to afford housing and care, especially those with chronic conditions.

“The data are a powerful call for bold and immediate cross-sector action to create affordable options for age-friendly housing,” Terry Fulmer, president of the John A. Hartford Foundation, said in a statement. “As more people live longer with mobility limitations, chronic conditions and cognitive impairment, we must have housing that fits our budget and care needs.”

The numbers are even starker by 2029, where the research predicts as many as 81% of these seniors will need to commit all of their annual financial resources—if they keep the assets they build up in their homes.

A projected 60% of middle-income seniors over the age of 75 will have mobility limitations by 2029, which equates to 9.6 million people. Another 8% of this demographic will have cognitive impairment, and for those over the age of 85, the prevalence of cognitive impairment almost doubles.

A large portion of seniors in the U.S. pay for senior housing out-of-pocket, with only a small percentage having long-term care to help with the costs. There is, however, Medicaid for low-income seniors that need a skilled nursing facility.

“This study shows we are woefully unprepared to accommodate a growing population of often-overlooked older adults who won’t be able to afford daily living supports within 10 years. Now is the time to understand their unique needs and develop solutions that appreciate their health and socio-economic status.” Bruce Chernof, M.D., president and CEO of the SCAN Foundation, said in a statement.

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So what can be done about this crisis? The study’s researchers suggest that the industry create new housing and care services specifically tailored toward this middle market. Private sector businesses can offer better technology and innovative real estate financing options to help this demographic.

Another suggestion is for the government to create tax incentives targeted toward the middle market that can be used to fund these housing communities. Other ideas include expanding Medicare coverage of nonmedical services, a Medicare benefit to cover long-term care and a broadening of Medicaid’s home services.

“The first step in addressing any problem is to initially define it,” the spokesperson said. “We hope that through this study, we will have identified this underserved cohort, its size, what its health and care needs are and what available financial resources exist. The second step is to engage policymakers and the private sector to work together to develop solutions.”

Plus, the NIC spokesperson notes that seniors should be having frank discussions with family members about what their plans and resources are before a crisis happens—not to mention saving more and spending less.

Some initial steps have been taken. Changing Centers for Medicare & Medicaid Services policy could allow the flexibility in Medicare Advantage plans to pay for nonmedical services and supports—such as senior housing. Also, states are working with their managed Medicaid plans to collaborate with senior housing providers.

“The authors of this study step out of the usual siloed approach of housing on the one hand, and health and long-term care on the other to consider the middle-income senior and their health and long-term care in a more integrated framework that includes their housing,” the NIC spokesperson said.

“This is an important contribution to the path forward in considering policy solutions that address this issue. In addition, solutions that address the housing, health care and long-term care needs of middle-income seniors will require a coordinated effort of the public and private sectors working together. Neither sector will be able to effectively address this challenge working alone.”